Clinton Drafts Plan to Overhaul Superfund Law

SINCE its enactment in 1980, the Superfund program to clean up toxic-waste sites has generated another form of waste: millions of dollars spent on legal fees as firms and insurers fight paying for cleanups.

This week, the Clinton administration is putting the final touches on a proposal for renewing the Superfund law that seeks to cut back on such spending and to speed up the cleanup process. In addition, communities will play a greater role in selecting remedies for sites.

With some sites, particularly abandoned urban ``brownfields,'' a proposed waiver of some Superfund liability would make them more attractive for investment and development.

In its efforts to satisfy environmentalists, businesses, and communities, the administration is engaged in a delicate balancing act. ``We want to create a more efficient and fair system,'' says an administration official, reflecting a consensus that Superfund needs an overhaul.

A cornerstone of the administration's draft legislation will be a new system of arbitration that allocates how much each party involved in a polluted site will contribute toward cleanup, according to administration sources. The government would fund the part of a cleanup that a responsible party is unable to pay.

``We created a system that is nonbinding but has enough carrots and sticks to make it desirable for responsible parties to go along with it,'' another administration official says.

Now, allocation of ``shares'' in a cleanup is determined by the polluters themselves, which results in an enormous number of litigations. A recent RAND Corporation study found that 32 percent of all outlays by firms for Superfund cleanups went for legal and negotiation expenses.

The administration's proposal is similar to one by the National Commission on Superfund, a panel representing industry, environmentalists, municipalities, minorities, labor, and communities - a group whose breadth makes its proposal important. It proposed that administrative-law judges be used to allocate ``fair shares'' in a binding-arbitration system.

But the administration does not favor using such judges because the government doesn't have the resources to hire the number needed to settle the cases. It also questions whether the limit on due process is constitutional. Yet the intent is the same: to settle cases once and for all.

The White House plans to send its bill to Congress next week. In a blow to business, the administration will propose keeping Superfund's provision for strict retroactive liability. ``Strict'' liability means that no negligence must be shown for a polluter to be held liable. Retroactivity means that a firm can be held liable for something it did before Superfund was enacted, which industry has found grossly unfair since firms are being charged for disposals that were legal at the time.

``Dumping retroactivity was a nonstarter for [Environmental Protection Agency (EPA) Administrator Carol] Browner,'' an administration source says. ``She fended off [Treasury Secretary Lloyd] Bentsen. The real issue is [that] the folks who made the mess must clean it up.''

If the ``polluter pays'' principle were dropped, the government would have to take on the enormous cost of cleaning up old polluted sites.

Getting rid of retroactivity would also be unfair to companies that have already paid for cleanups, says John Pendergrass, senior attorney at the Environmental Law Institute. This could set off a new round of litigation.

The administration also proposes keeping a softer version of ``joint and several'' liability, which allows the government to charge one polluter with cleaning up an entire site if other polluters cannot be found. Under the administration proposal, a firm that submits to arbitration would have to pay only for its allocation. One that opts out of arbitration would be held ``jointly and severally'' liable for the remaining portion, creating a strong incentive to submit to arbitration.

Under the new Superfund, the EPA would also work more with businesses charged in cleanups to set up affordable payment schedules. Some businesses have gone bankrupt because of Superfund.

The administration's proposal will also likely call for:

* Establishment of a revolving fund financed by the insurance industry from which partial payments on Superfund settlements will be taken. The fund is expected to include at least $500 million. If too much is required, the insurance industry could be destabilized. But if the fund is too small, the whole scheme could fall apart. The RAND study found that between 1986 and 1989, a whopping 88 percent of insurers' expenditures on Superfund were for legal and consultants' fees. Creation of the fund would excuse insurers from having to pay for cleanups, and would eliminate the need for so much litigation.

* Establishment of national cleanup standards, which should make cleanups speedier and cheaper. In the selection of cleanup remedies and their level of cleanliness, a distinction will be made between residential and nonresidential sites. The EPA has been criticized for requiring ``gold-plated'' remedies for nonresidential areas. States will still be allowed to require greater cleanliness, but they'll have to pay for the cost difference.

* Exemptions from Superfund liability for potential creditors on urban ``brownfield'' sites. Investors will have an easier time getting credit to buy such troubled parcels of land - typically located in minority areas - if prospective creditors know they will not be stuck with a Superfund bill if the investor forecloses.

Advocates of the administration's position and congressional Democrats eager to fix Superfund are urging speedy action on reauthorization. Health-care reform and this fall's elections will increasingly divert attention from other issues, and Superfund could get bogged down. But with so many involved constituencies - from business to environmentalists to minority groups - quick action may not be so easy.